SCOTTSDALE, Ariz.—Medicis, a
specialty pharmaceutical
company focused on the treatment of dermatological and aesthetic conditions,
has announced that it emerged as the successfully
bidder at Graceway
Pharmaceuticals, LLC's bankruptcy
auction for substantially all of Graceway's
outstanding U.S and Canadian pharmaceutical assets. Graceway filed its Chapter
11 bankruptcy protection on
Sept. 29, 2011. Per the terms of the bid, Medicis
will pay Graceway a purchase price of $455 million, after which it will receive
Graceway's
commercial pharmaceutical product portfolio, which currently
consists of prescription products in several fields including dermatology,
respiratory and
women's health specialties, as well as certain other assets.

"We are pleased to announce this
strategic acquisition
of the Graceway product portfolio, and the ability to broaden our presence
within dermatology," Jonah Shacknai, Chairman and
Chief Executive Officer
of Medicis, said in a press release. "We anticipate near-term positive
cash flow as we market certain newly acquired Graceway
products which are
currently approved for various dermatological and women's health conditions.
Additionally, we are very pleased to be adding to our
pipeline several mid- and
late-stage products with a combined annual net sales peak potential of over
$500 million in the dermatology and women's
health categories."

The bid gains Medicis a strong selection of products from a
varied portfolio. As a
result of the auction, it has gained a formulation-stage
dermatology project with an applied-for patent as well as projected annual peak
sales of more
than $200 million; a dermatology chemical entity product in Phase
II with patent protection through 2016, a potential patent term extension of up
to
five years and projected peak sales of more than $200 million; and also a
nearer-term women's health product, which has completed Phase II and is
entering Phase III, also with an applied-for patent and projected peak annual
sales of more than $100 million.

Medicis will also have the opportunity to launch two
recently approved line extensions for the Zyclara franchase. Zyclara is
a
dermatological product, and Zyclara Cream 3.75% and 2.5% are indicated for the
treatment of external genital and perianal warts, while Zyclara 3.75%
is also
indicated as a topical treatment for clinically typical visible or palpable AK
of the face or balding scalp in immunocompetent adults.

Some of the other Graceway pharmaceutical products that
Medicis will acquire include the Maxair Autohaler for
the prevention and
reversal of bronchospasm in patients with reversible bronchospasm (including
asthma), Estrasorb for the treatment of moderate to
severe vasomotor symptoms
(hot flashes) related to menopause and Metrogel-Vaginal 0.75% for the treatment
of bacterial vaginosis. Also from the
dermatological program, Medicis will
acquire Atopiclair Nonsteroidal Cream to manage symptoms related to dermatoses
(including atopic dermatitis and
allergic contact dermatitis) and Aldara Cream
for the treatment of clinically typical, nonhyperkeratotic, nonhypertrophic
actinic keratoses on the face
or scalp; the topical treatment of
biopsy-confirmed, primary superficial basal cell carcinoma in immunocompetent
adults; and the treatment of external
genital and perianal warts. These
products represent annual revenues of more than $125 million.

The
transaction is subject to approval by Graceway's board
and the execution of a definitive asset purchase agreement, which will include
customary
closing conditions such as clearance under the Hart-Scott-Rodino Act
and approval by the bankruptcy court. Medicis expects the acquisition to be
accretive to the company in 2012 and will update its financial guidance upon
the closing of the transaction.